The Housing Price Index (HPI) will be a guide for market players and policy makers for tracking the housing sector. The new tool will be grounded on ‘locational, qualitative and quantitative characteristics’ that impact pricing in the country.
During an interview with CNBC Africa Jared Osoro, the head of research at KBA said, “It will solve a lot of problems but it depends on how the analytical toll is used and who is going to use it. So the tool itself is going to be an instrument for solving the problems [in the real estate sector].”
“We are very upbeat about its potential to be a useful tool for purposes of managing the housing sector.”
The country’s real estate sector continues to grow immensely highlighting the rising demand and investor confidence in the entire sector. During the country’s rebasing – replacing of the old base year used for compiling the constant price estimates to a new and more recent base year - the sector contributed 5.9 per cent accounting for most of the change in the level of the country's GDP.
However, according to Hassconsult’s latest recent report on the property market property prices in Nairobi continue to rise. However, a survey by the country’s central bank revealed there were less than 20,000 mortgage loans in the country in 2013, a fraction to that of the population of the capital city Nairobi at over four million.
“The tool we are proposing essentially provides a robust nature of analytical capability of the sense that it is able to indicate beyond just the mere movement of prices and location. What attributes potential buyers of homes they are looking for and therefore will enable developers to price appropriately,” Osoro explained.
During the launch of the tool KBA Governing Council Member and Managing Director of Housing Finance, Frank Ireri said, “The KBA HPI is an important tool which will provide institutional investors and individual homebuyers with information about house price inflation – allowing these investors to make better comparisons and assessments.”
“The index would be an important indicator in informing how to deal with supply constraints that lead to escalated prices in the housing sector.”